D. Committee of the Whole

APPROVED VILLAGE OF LAKE ZURICH SPECIAL COMMITTEE OF THE WHOLE MEETING JUNE 18, 2007 The meeting was called to order at 6:14 p.m. ROLL CALL: Present –Mayor Tolomei, Trustees Branding, Johnson, McAvoy, Poynton, and Taylor. Excused – Trustee Callahan. Also present – Acting Administrator/Finance Director Martynowicz and Village Attorney Burkland. DISCUSSION WITH STEVE FRIEDMAN AND COMPANY REGARDING TIF CONTRACT AND EXPENSES: Mayor Tolomei said the meeting was called because the lenders are requesting a higher down- payment and additional funds are needed to proceed with the downtown revitalization due to the downturn in the housing market. The goal of the meeting is to address the issues and find ways to sustain and accelerate the progress on the downtown. Steve Friedman, S. B. Friedman and Company, provided an update on the current status of the TIF (tax increment financing). He gave a brief status report on the TIF budget and expenditures. The original amount was $25 million, but it can be increased for inflation without amendment. Mr. Friedman said the core amount for capital spending was $28.2 million, which is increased to $28.6 million when adjusted for inflation, which leaves one-half-million-dollars left without interest. He said the TIF budget will need to be amended. Various projections and scenarios were presented on the Somererset and Concorde projects. He provided two projections showing school reimbursements. One was at the maximum level of 40%, and one was at the level he and the Village staff thought was more reasonable and in balance with typical school contributions for this type of project. Mr. Friedman said the TIF is on solid ground, and there is every reason to believe there is a positive balance. He said it is important to remember that the reason the TIF District was created was to build a great downtown The steps necessary to amend the TIF budget were presented. The Downtown Master Plan and the projects must be reviewed and revisited. Changes must be clearly outlined and the necessary documents prepared so public meetings could be held. Legal requirements for noticing meetings must be followed included mailings. School District 95 would need to be part of the meetings. A public hearing must be held prior to the Board of Trustees taking action. Mr. Friedman said the staff and legal counsel normally handle the legal notices and mailings. A brief question and answer period followed with the Committee of the Whole asking questions of Mr. Friedman and staff. Finance Director Martynowicz said the Finance Department keeps historical details and current figures on the TIF revenue and expenditures. Mayor Tolomei said it was not his intent to redesign the project but to consider what could be done with the Grandview project. Special Committee of the Whole Meeting Minutes, June 18, 2007 2 Developer Dan McCaffery, McCaffery Interests, and architect and planner Joe Antunivich, Antunovich Associates, gave an update and presentation on the downtown redevelopment. Mr. Antunovich gave a PowerPoint presentation (dated June 18, 2007) on the Downtown Redevelopment Master Plan including the proposed elevation, existing elevation, master plan, existing site plan, proposed site plan, existing floor plan, proposed floor plan, Main Street existing and proposed elevations, Mionske Drive existing and proposed elevations, Lake Street existing and proposed elevations, and various sketches, photographs, and designs. Mr. McCaffery reviewed the sketches and photographs of the Somerset Building which won awards from the Home Builders Association. It was awarded best exterior and exterior and best kitchen and master bedroom. He provided the status on Buildings 1-6. Out of 20 units, 10 have been sold, 2 are on reserve, and he has a potential buyer that could translate into another sale. He may suggest redesigns for Buildings 5 and 6 so they would be more horizontal and appealing to seniors. Mr. McCaffery and Mr. Antunovich presented the proposed changes to the Grandview Building. They are proposing a reduction of one level so there would be three stories over the retail units. Changes would be made to the north end of the building. There would be 10 units per floor or a total of 30 residential units. The size of the units would be reduced, which would allow them to sell for $125-130,000 less than the lowest until now is listed for. This will allow the units to be available to a larger demographic group and should accelerate sales. The revised proposal would decrease the private cost of the building and increase the bank’s comfort level with the lower number of units. Mayor Tolomei expressed his support for the changes from 5 stories to 4 stories. He said he hoped it would help build a consensus within the Board and move the project forward so it would generate revenue. Trustee Taylor was not convinced that the project needed to be scaled down and thought it was perhaps too close to becoming a reality to make changes. He did not want to lower the quality of the “crown jewel” of the development. Mr. McCaffery pointed out that only units on the north end would be smaller and it should not impact the other units. He will discuss the revisions with the owners of the units. Mr. Friedman said he must see the numbers before offering anything other than a general opinion. Trustee McAvoy said he has always liked the five-story-building and would prefer to see it remain but would reluctantly agree to a four-story-building only if it was necessary to get the project going. Trustee Poynton did not think the revisions would cheapen the building but would provide less expensive units with the same level of quality. Trustee Johnson thought the proposed 1,000 s.f. units might be more agreeable to Lake Zurich senior citizens. Special Committee of the Whole Meeting Minutes, June 18, 2007 3 Trustee Branding questioned what the Village’s expenses would be with a four-story versus five- story-building. Mayor Tolomei asked Village Attorney Burkland to address a point of order and asked him for his opinion if a member of a corporate authority within the TIF District may participate and vote on discussions related to the Downtown Redevelopment Project. Village Attorney Burkland said they should recuse themselves of any issue related to the project. If they own a business within the TIF District, it provides a conflict of interest. Since this topic was not on the agenda, Mayor Tolomei said a special meeting should be noticed and held to discuss this further. MOTION made by Trustee Poynton, seconded by Trustee McAvoy, to recess the Committee of the Whole meeting at 7:26 p.m. and reconvene after the Board of Trustees meeting. AYES: 4 Trustees Johnson, McAvoy, Poynton, and Taylor PRESENT: 1 Trustee Branding NAYS: 0 MOTION CARRIED MOTION made by Trustee Poynton, seconded by Trustee McAvoy, to reconvene the meeting at 7:54 p.m. Voice vote, all in favor. MOTION CARRIED. Rich Sustich, 217 Sandy Point Lane, asked for clarification on the time-frame that Mr. Friedman and Mr. McCaffery referred to. Mr. Friedman said it would take 4-6 months to review the master plan, adjust the budget, have a public hearing, and approve the revised plan. He again stated that the TIF and budget will need to be amended. Jim Tarbet, 1195 Cedar Creek Drive, said the Village should address and correct all issues at this time before moving forward. Mr. McCaffery concurred that the TIF must be amended. He said the changes to the construction plans would not be difficult to make, and construction could begin anywhere from September to the end of November. He said they must sell two more units if it is a four-story 12-unit building or sell five more units if it is a 15-unit five-story-building. Mayor Tolomei said a bond issue would be necessary to bridge the gap for the four-story-building and stated that firm numbers are not available yet. He said he intended to poll the Committee of the Whole, but they have received legal advice saying who should not comment on this issue. He asked Trustee Branding to make a decision on whether she should participate in discussion. Trustee Branding said that she has had other advice that says she can comment and responded that she does not feel she has enough information to react to at this time. She asked for more financial and general information on the revised plan. Special Committee of the Whole Meeting Minutes, June 18, 2007 4 Trustee Taylor agreed but stated his preference to stay the course, but he does not want to delay the project. He will support the existing plan unless it became outrageous. Trustee Taylor asked Mr. McCaffery to provide benchmarks and deadlines Trustee McAvoy agreed with Trustee Taylor about preferring the existing plan but not wanting to stall the project. He would acquiesce to the revisions but only if it was necessary. Trustee Poynton said the money is a huge issue but noted the project was getting close to being ready for construction. Trustee Johnson prefers four stories to five and thought the revised plan would help push up the time-table and result in sales. He said he would need more information before supporting it. Trustee Poynton asked staff to include the de minimis ruling from the Comet Welding decision and to correct those items before proceeding. He stated that Trustee Branding should be able to vote and asked staff to see if there was a way that this could be achieved. Trustee Johnson said the Branding’s home and bed and breakfast is actually outside of the development area even though it is in the TIF District. Village Attorney Burkland said he would be research the issue of Trustee Branding voting if he was directed to. He pointed out that the prohibition was not meant to be punitive but protective. Village Attorney Burkland said three out of four de minimis issues can be fixed before proceeding on amending the TIF. Mr. McCaffery said the retail space will not be difficult to fill and had inquiries from several restaurants although none were firm since the construction time-table was so uncertain. Mayor Tolomei summarized the action to be taken. The financial information must be further developed based upon the cost estimates for the four-story-building, and staff was directed to provide all information requested by S. B. Friedman and Company and to work with them to start putting in place the necessary papers and hearings for the amendment of the TIF with an update to be provided at a future committee meeting. ADJOURNMENT: MOTION made by Trustee Johnson, seconded by Trustee Branding, to adjourn the meeting. Voice vote, AYES have it. MOTION CARRIED. The meeting was adjourned at 8:27 p.m. Submitted by: Janet McKay, Recording Secretary Approved: 7/9/07